MAPLETREE COMMERCIAL TRUST (SGX:N2IU)
Mapletree Commercial Trust - Shaking Off The Pandemic
- Mapletree Commercial Trust's 1HFY21 DPU fell10% y-o-y to 4.17 Scts dragged by VivoCity, partially offset by MBC2 and release of S$15m capital allowance.
- Committed occupancy healthy at 97.7%; tenant sales c.80% of pre-COVID levels, outpacing shopper traffic.
- Highlights:
- -3.7% reversion mainly from VivoCity;
- reconfigured 2 areas in VivoCity with new tenants Shake Shack and Love, Bonito,
- upcoming rightsizing in office/ business parks but tight supply of quality assets to mitigate impact.
Mapletree Commercial Trust's 1HFY21 DPU slightly below:
Decline mainly from Vivocity due to COVID-19 offset by contributions from MBCII; released S$15m of capital allowances retained in 4QFY20.
- Mapletree Commercial Trust (SGX:N2IU)'s 1HFY21 DPU fell 10% y-o-y to 4.17 Scts, slightly below our estimates, mainly due to decline in NPI mainly from Vivocity due to COVID-19, partially offset by contributions from Mapletree Business City II (MBC II) which was acquired on 1 Nov 2019 and S$15m of capital allowance claims which was retained in 4QFY20 (estimated remaining amount retained is c.S$28.7m).
- Mapletree Commercial Trust's 1HFY21 revenue and net property income (NPI) declined 2.5% y-o-y and 2.6% y-o-y to S$219m and S$171m respectively. Similarly, the decline was mainly due to COVID-19 rental rebates disbursed partially offset by contributions from MBC II.
- Revenue and NPI declines were largely from Vivocity (- 41% y-o-y and 43% y-o-y respectively) while the office / business parks portfolio (ex-MBC2) declined by 3% y-o-y and 2.6% y-o-y respectively.
- Gearing was relatively stable at 33.8% (vs 33.7% in 1QFY21 and 33.3% in 4QFY20).
- Average cost of debt reduced marginally to 2.57% vs 2.61% in 1QFY21 (2.94% in 4Q20).
- Mapletree Commercial Trust has > S$600m of cash and undrawn committed facilities as at Sep20, providing ample liquidity to meet working capital and financial obligations.
- In 1HFY20, Mapletree Commercial Trust recorded 2.3% decline (or S$203m) in valuation of its assets to S$8.7bn. Valuation of all assets declined with the larger declines from VivoCity (-3.5%), PSA Building (-3.8%), Mapletree Anson (-2%) and MBC II (-1.7%). There were no adjustments in cap rates.
- NAV declined 2.2% to S$1.71 vs S$1.75 as at Mar20.
Mapletree Commercial Trust - Operational highlights:
Committed occupancy remains healthy; tenant sales recovered to c.80% of pre-COVID in Sep20 outpacing shopper traffic’s c.50%; -3.7% rental reversions mainly from VivoCity (-8.9%).
- Mapletree Commercial Trust's portfolio’s committed occupancy declined marginally q-o-q to 97.7% vs 98.2% in 1QFY21 and 98.7% in 4Q20. The decline was mainly from PSA Building (-2.5ppts to 87.9%), Vivocity (-0.5ppt to 97.9ppt) and MBC I (- 0.5ppt to 98.2%).
- Post the circuit breaker, Mapletree Commercial Trust saw encouraging resumption of shopper activities with tenant sales at c.80% of pre-COVID levels in Sep 2020, outpacing shopper traffic which was c.50% of pre-COVID levels in Sep 2020.
- In 1H20, Mapletree Commercial Trust committed a total of 91 leases recording - 3.7% of rental reversions with high retention rate of 78%.
- Retail portfolio committed a total of 71 leases with 79.1% retention rate but recorded -8.9% rental reversions partly due to the challenging operating environment and some impact from trade mix changes and units subdivided and/or amalgamated.
- Office portfolio committed 20 leases with 77.5% retention rate and recorded -1.6% rental reversions. The negative rental reversions were partly due to the lease expiry of a major tenant at PSA Building.
- Excluding the expiry of a major tenant’s short-term lease a t PSA Building in Aug 2020, the rental reversion for the portfolio was -0.9% and Office / Business Park was +2.9%.
- Portfolio WALE was stable at 2.5 years (2.1 years for retail and 2.8 years for office/business park space).
COVID-19 impact: provided on average > 4mths of rental rebates with assistance tapering off in Aug-Sep20
- Mapletree Commercial Trust has provided on average more than 4 months of rental rebates / waivers of fixed rents from Mar-Sep20. Assistance has tapered off post Circuit Breaker with rental rebate in Aug-Sep20 of c.0.2 months more targeted based on tenants’ actual sales performance.
- Amid the pandemic, Mapletree Commercial Trust took the opportunity to reconfigure two areas at VivoCity, to generate more than 30% ROI on a stabilised basis for both initiatives –
- reconfigured Best Denki’s layout on L2 and doubled its shopfront while recovering prime space of 4.3k sqft that is leased out to Love, Bonito,
- revitalised the L1 promenade-facing F&B cluster and added 1 more F&B operator (3 previously) to the cluster. Target completion is 3QFY21 (year-end). New F&B operators include Shake Shack, Afuri Ramen, Green Common and Hoshino Coffee.
Mapletree Commercial Trust - Outlook
- Retail – Despite this year remains challenging, recovery in shopper traffic and tenant sales have been encouraging thus far and is expected to pick-up further as we move progressively to phase 3 and with more travel restrictions lifted and tourists returning..
- Office – office portfolio remains relatively steady and delays in the completion of development projects should dissipate over-supply concerns in the near-term.
- Business Parks – seeing some demand from the tech sector that could offset some large occupiers have cut back on space requirements. Given the tight supply in the City Fringe, good quality business parks will continue to garner interests.
- See Mapletree Commercial Trust Share Price; Mapletree Commercial Trust Target Price; Mapletree Commercial Trust Analyst Reports; Mapletree Commercial Trust Dividend History; Mapletree Commercial Trust Announcements; Mapletree Commercial Trust Latest News.
Rachel TAN
DBS Group Research
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Derek TAN
DBS Research
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https://www.dbsvickers.com/
2020-10-23
SGX Stock
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